By Geoffrey Smith
Investing.com -- U.S. stock markets opened mixed on Tuesday, as extremely strong earnings from retailers revived fears about inflation and a possible early tightening of monetary policy, undermining overnight gains in futures contracts.
Both Walmart (NYSE:WMT) and Home Depot (NYSE:HD) blew past expectations with their quarterly reports, apparently more than able to pass on higher input costs to consumers flush with cash after the latest round of stimulus checks.
By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was up 36 points, ior 0.1%, at 34,364 points. The S&P 500 was up 0.1% and the Nasdaq Composite was up 0.4%. All three major indices had opened the week with losses on Monday.
The mood was also hit by Treasury Secretary Janet Yellen refreshing the theme of higher corporate taxes in a speech to the U.S. Chamber of Commerce. Yellen told the Chamber that U.S. corporate taxes are 'at a historic low'.
However, it was the retail earnings that most caught the eye. Walmart stock rose 3.5% after the company reported a 6% rise in same-store sales excluding fuel in the three months through April. CEO Doug McMillon said he was now more optimistic than at the start of the year, anticipating pent-up demand to keep sales buoyant all year.
Home Depot stock meanwhile fell 0.1%, despite signs that customers not been put off buying lumber (around 10% of its sales) despite the sharp rise in prices for it this year. Sales rose 33% from a year earlier.
Analysts expect the last quarter to represent something of a high-water mark for the home improvement sector, as the reopening of the economy drains money away from merchandise goods and into services and experiences. There was some corroboration of that in April's housing starts numbers, which fell nearly 10% from March. Building permits in April rose modestly, but fell short of expectations. Home Depot itself didn't feel able to give guidance for the full year.
Elsewhere, AT&T (NYSE:T) stock fell another 7% as analysts concluded that its deal to retreat from media and place its assets in a joint venture with Discovery (NASDAQ:DISCA) would make it harder to sustain its generous-looking dividend in the future. Tesla (NASDAQ:TSLA) stock rose 0.3%, shrugging off news that Michael Burry, famed for his bet against mortgage-backed securities before the 2008 crash, had taken a fresh short position in the electric carmaker.